Profits jump at 'challenger' consultancy Elixirr

Elixirr International (ELIX) has reported double-digit growth, and momentum is set to continue into 2024. Revenue at the Aim-traded consultancy increased by a fifth in 2023 to £85.9mn, and adjusted Ebitda jumped by 24 per cent to £25.4mn. 

Organic revenue growth was strong at 15 per cent, and this was evenly spread between existing clients and new ones. Acquisitions were responsible for the remaining progress, with Elixirr branching out from strategy consulting into areas such as artificial intelligence and data analytics. 

Revenue per partner has increased by 7 per cent to £3.9mn and Elixirr managed to poach three new partners last year, suggesting its reputation in the industry is strong – despite plenty of competition. 

Market conditions remain “challenging”, with UK banking clients proving particularly troublesome, according to chief executive and founder Stephen Newton. However, the group has diversified in recent years, meaning it is less exposed to the fortunes of the financial services sector.

This seems to be paying off. The group achieved record sales in the first quarter of 2024, and revenue for the full year is expected to reach £104mn-£110mn. Adjusted Ebitda margins are due to dip from 30 per cent to 27-29 per cent as a result of a recent acquisition, but this still implies profit growth of at least 11 per cent. 

Much will depend on how Elixirr’s acquisition strategy plays out, and investors don’t have much to go on in terms of track record. For now, however, this 'challenger' consultancy is thriving in a difficult market for the biggest players. Buy.

Last IC View: Buy, 590p, 18 Sep 2023